I believe in a hard cap because some players feel compelled to grind for perfection, and rewards those willing to waste lots of time grinding for that perfect game.
However, now that Starsector 0.9.1a progresses slower except for level gain, I reach level 50 before endgame, unlike in 0.9a. Now, it is somewhere between 0.8.x where you hit level 40 in midgame, and 0.9a where you hit level 50 right before endgame. Today, with slower wealth and colony progression, I hit level cap a significant time before I have endgame fleet and large enough self-sufficient colonies. Player needs to fight more to get the income to buy more expensive ships and colonies. It also takes longer to grow colonies, now that Growth Incentives is practically one-half of a Free Port.